Brian John Harris v Mark Kevin Harris - [2013] NSWSC 1010

Supreme Court

New South Wales

Medium Neutral Citation: Brian John Harris v Mark Kevin Harris [2013] NSWSC 1010
Hearing dates: 18 & 19 July 2013
Decision date: 30 July 2013
Jurisdiction: Equity Division
Before: Kunc J
Decision:
Statement of claim dismissed

Catchwords: CONTRACTS - Unjust contracts - Contracts Review Act - Plaintiff urgently needed funds but determined to keep property in family name - Only prepared to sell to nephew who agreed to purchase for all he could afford and granted seven year lease back to Plaintiff - Both parties understood price was a significant undervalue - Contracts not unjust in the circumstances
Legislation Cited: Contracts Review Act 1980 (NSW)
Civil Procedure Act 2005 (NSW)
Cases Cited: Darmanin v Cowan [2010] NSWSC 1118
Perpetual Trustee Company Limited v Khoshaba [2006] NSWCA 41
West v AGC (Advances) Ltd (1986) 5 NSWLR 610
Category: Principal judgment
Parties: Brian John Harris by his Tutor Ms Rennie (Plaintiff)
Mark Kevin Harris (Defendant)
Representation: Counsel:
Mr P. Batley (Plaintiff)
Mr C.H. Cassimatis (Defendant)
Solicitors:
Legal Aid Commission of NSW (Plaintiff)
Mitry Lawyers (Defendant)

File Number(s): 2011/330917
Publication restriction: No

Judgment

Summary

The plaintiff is the uncle of the defendant. Without disrespect I shall refer to them as "Brian" and "Mark" respectively.

In 2003 Brian needed $20,000 to pay lawyers for his defence against criminal charges. His only asset was a property at Wyong Creek on the New South Wales Central Coast (the "Property") on which he had lived his whole life. He had promised his late mother that he would keep the Property in the family.

In December 2003 Brian sold the Property to Mark at what both understood at the time to be a significant under value. As part of the sale Mark gave Brian a seven year lease (the "lease") of the Property at a peppercorn rent.

The lease has come to an end. Mark has obtained orders in the Consumer, Trader and Tenancy Tribunal (the "CTTT") against Brian to recover possession of the Property. In any event Brian, who is now 73, is suffering from a mental illness and lives in aged care accommodation. There is no suggestion he will ever be well enough to live alone again.

Brian brings these proceedings by his tutor, Ms Rennie, who is his first cousin. He alleges he is entitled to relief under the Contracts Review Act 1980 (NSW) (the "Act") against Mark. By the end of the hearing Brian's counsel, Mr P. Batley, specified that relief as an order increasing the purchase price of the Property and an order for compensation.

The issues are narrowed

As originally pleaded the parties presented three additional issues for determination. In the alternative to his claim under the Act, Brian argued he had an enforceable agreement with Mark for a life tenancy of the Property. Mark contended that Brian's claim under the Act was statute barred or that the orders of the CTTT gave rise to a res judicata.

Each of these additional issues was ultimately not pressed.…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2013] NSWSC 1010
Decision Date: 30 July 2013

CaseChat Overview and Summary

In the matter of Brian John Harris versus Mark Kevin Harris, the Federal Circuit Court was tasked with examining the validity of a property sale agreement between uncle and nephew. The plaintiff, Brian John Harris, urgently needed funds and sought to sell his property to the defendant, Mark Kevin Harris, his nephew. Both parties understood that the price agreed upon was significantly below market value. In addition to the sale, the nephew agreed to lease the property back to the plaintiff for seven years.

The court was required to determine whether the contract was unjust under the Contracts Review Act. The central issue was whether the significant undervaluation of the property rendered the contract unjust, despite both parties' understanding and agreement to the terms. The court needed to balance the protection of vulnerable parties with the principle of freedom of contract and the parties' apparent consensus on the terms.

The court found that the contract was not unjust in the circumstances. It reasoned that both parties fully understood the terms and agreed to them freely, and the plaintiff had a legitimate reason for selling the property at an undervalue. The court emphasised the importance of family relationships and the plaintiff's desire to keep the property within the family. The court concluded that the contract, while not commercially fair, was not unjust given the context and mutual understanding of the parties.

The court ordered that the contract for the sale and lease back of the property be upheld. It dismissed the plaintiff's claim that the contract was unjust, finding that the agreement reflected the genuine intentions and understanding of both parties.

Orders